Debt-ridden telecom firm Reliance Communications Ltd. on Wednesday said its subsidiary GCX filed for bankruptcy protection in the U.S. without any prior consent of the company.
The business-to-business arm of RCom, GCX has voluntarily filed for bankruptcy protection under chapter 11 of the U.S. bankruptcy code last week, as per a regulatory filing.
“Kindly note that while there was financial stress in GCX, however, the decision to file for bankruptcy protection under chapter 11 of the United States Bankruptcy Code has been made by the management of GCX without any prior consent of the Company,” RCom said in the filing.
GCX on Sept. 15 announced that it has initiated a voluntary case under Chapter 11 of the U.S. Bankruptcy Code to effectuate the plan while continuing to serve its customers as usual.
“Upon emergence from this process, the Company expects to be well-positioned to aggressively pursue its business plan independent of the overhang caused by its corporate parent's challenges,” GCX said.
It claimed that more than 75 percent of the company's lenders have already committed their support for the plan, which outlines the terms for a transaction through which GCX's senior secured noteholders would become owners of the Company and provide new loans to support and grow the business.
“GCX expects to complete the Chapter 11 process and emerge as a stronger company within the fourth quarter of 2019, subject to all required regulatory approvals,” the company said.
RCom, on the other hand, itself is undergoing through insolvency proceedings in India.
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